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Good morning, ladies and gentlemen. Exciting news today. In addition to our fourth quarter results, we have also announced a new strategy. We will first introduce the highlights of our fourth quarter and then take your questions on the results. We will then proceed to the strategy and provide you with insights into the market opportunity and how we will further improve competitiveness of our customers and Tieto, and then take your questions on that part. My name is Tanja Lounevirta, and on my behalf, I welcome you all. And now we start with the presentation by Kimmo Alkio, our President and CEO. Kimmo, please.
Thank you very much, Tanja. And welcome also on my behalf to conclude a very exciting 2018. We are very pleased that we have concluded year 2018 in a strong manner. A good performance overall, supported by strong growth and strong cash flow. Growth accelerating for the full year, 7% in local currencies; end of year, 5%. From a margin standpoint, fourth quarter at 11%, while we also reached our longer-term ambition of profitability of 10%. Furthermore, we continue to have a -- accelerate the dividend proposal by the Board of Directors, dividend proposal of EUR 1.45. And furthermore, as announced earlier today, we are launching a new strategy. We believe the market opportunity is even greater than we have achieved up to now. With that in mind, we have also upgraded the longer-term financial objectives. The longer-term development, I would call it a multiyear progress, continues to build good confidence in the minds of our customers and employees and shareholders. This year, really important is the development around customer experience. By far, the best results we have ever had, supported by continuous very positive improvement of employee engagement, adds to the confidence that our customers also see and our colleagues within the company, continued good progress over multiple years. In parallel, as noted in the graphs below -- or towards the bottom of the page, the growth trajectory has continued to become more favorable as we have intended, while we have maintained the profitability development well in alignment with our longer-term plans. And I would like to, again, just highlight which we have discussed in prior quarters and years, we have, in a very determined manner, increased our investment level into new technologies and new services over the last 4- to 5-year period, with the combination of profit improvement while investing for the future, I believe has been a nice confidence builder towards all of our main constituents. Very practically, first, a brief recap of the full year. Net sales, up by 4%; in local currency, 7%. This is very much in line with our own expectations for 2018. And naturally, the better we do our ambition, we'll also go further up north. But fairly good from a top line development standpoint. Full year profitability at EUR 154.7, 9.7%, while the adjusted EBIT, EUR 162.8 million and 10.2%. Naturally, we have had higher investment levels fully as planned for the full year and quite a significant currency impact of EUR 8 million, relatively well predictable, to be fair, throughout the year. Overall, we are fairly satisfied with the profitability development. I do personally believe we have clearly more upside from a profitability standpoint given the magnitude of investments as openly reflected throughout last year. The incremental investments, we believe, needed to be done especially for our software businesses. Furthermore, also a summary a bit on a longer-term perspective on the dividend side, we have been increasing dividends now 7 or 8 years in a row. And as mentioned briefly earlier, the dividend proposal is EUR 1.45, comprising of the base dividend EUR 1.25, an additional dividend of EUR 0.20. I would anticipate the dividend outlook and the proposal also consistent with the market expectations. A few reflections, as usual, on the overall technology sector, IT software -- IT services market. No fundamental changes in the last quarter. I believe we have seen, in the last roughly 1 year time frame, the continuous increase in the appetite of increasing investments from the customer side towards data-rich services, really taking advantage of the opportunities, personalized real-time services do provide once smart utilization of data is being applied for our customers and customers' experiences. And furthermore, the hybrid infrastructure as a foundation for business continuity, naturally, continues to be very important in the eyes and minds of our customers. And our role in supporting high availability and managing that complexity is of very significant value, I do believe, in the overall market. I think we are ending 2018 with a degree of higher macroeconomic uncertainty than in a while, which is, I think, very well visible in all media. Furthermore, I do not believe the slight shift in the macroeconomic trends would, in any way, impact our outlook. We've said this for roughly last 5- to 6-year time frame, that we do believe that the Tieto agenda for minor moves in the macroeconomic trends, we will continue to execute our agenda. And we are not really changing the market outlook for Nordic IT services between 2% and 3%. So roughly similar, maybe a bit higher than 2018, driven by the investment appetite especially for the data-rich services. So overall, our market, I do believe, worldwide around technology, technology enablement, helping to make our customers' businesses more competitive, it is a very -- it's a good market, good opportunity for tech companies. Competition is hard. It has been hard. And we -- I believe we have demonstrated sustainably that Tieto's competitiveness continues to improve and is on a good level. Then if we go into further details of the practical report card and the kind of indicators of fourth quarter, revenues of EUR 422 million, growth in local currencies of 5%, organic growth in local currencies 3%. Overall, revenue development consistent with our own plans and expectations for the fourth quarter. Profitability adjusted, EUR 49.8 million, 11.8%, roughly where we have intended. And to be fair, some additional costs continued on the software businesses that we had anticipated into our forecast. So we are quite satisfied with the overall development for fourth quarter. And overall, as commented, the full year 2018 adds to the longevity of the positive development of the firm as a whole. Furthermore, I would like to comment a bit on order backlog, healthy and well supports our ambitions for 2019. And we continue to experience what we have reflected upon in past quarters that more and more of the industry is becoming shorter term, thus not through the long-term contracts, thus, not as much as large proportion of the future revenues are from the backlog compared to how much comes from short-term projects. We believe this is healthy. And interesting enough, actually, we did have a strong book-to-bill fourth quarter. So then we did have, in a number of the businesses, especially part of our industry group such as Financial Services, very strong order intake towards the end of the year. So overall, fourth quarter, I think, confirms our full year positive development.Furthermore, I would like to comment just a bit on how are we modernizing Tieto, in relation to other sectors it's transforming itself as a whole. And you'll remember, this is a consistent view we've had for a number of years. Very important in this sector to take good care of the traditional services, where price erosions -- erosion is imminent, while the market share gains are through emerging services, and we are doing well actually on both sides. Traditional services, up by 1%. In some companies in the sector, traditional side might be even decline, and we've been pretty consistent there with kind of a low single-digit growth. And performance, overall, well supported by our -- good developments in our application services as well. Then on the growth businesses, on the upper side overall, the lighter blue combination of growth businesses, other services and solutions, 7% and 19%. To be fair, part of our acquisitions are in Sweden, Avega, reported within this 19%. So that gives a slightly unique perspective there. And overall, the investment agenda -- growth agenda has been really important for us, and it will continue to be valuable and of high priority. Furthermore, to open up a bit on the distinct growth bets we have made. Customer Experience Management continues to grow healthily at 16%. Data-driven business, as expected, of 100%. Cloud services for the year, approximately 15%, well in alignment with the private cloud-centric market of the overall cloud infra business. And Security Services, fairly healthy at 16%. So maintaining the eye on growth investments and some degree of fluctuation on the velocity of the businesses, which is pretty usual.Regarding our software businesses, Industry Solutions, growth of 3%, not for the full year at our longer-term ambition. It is very much and has been predictable given the investments and some delays we had in the road maps of 3 main software businesses as we have gone through very significant architectural changes. If I first just comment briefly, the velocity during the overall second half of the year. In the summertime, we had 3 challenges. We had our Smart Utility, our Lifecare side and our Payments side. During the second half, both the Lifecare and Payment businesses have developed very favorably, and we continue to invest a bit higher levels into our Smart Utility side. Furthermore, we have had really good performance in the oil and gas sector, we call the Hydrocarbon Management. Clearly, stronger 2018 than 2017. A case management company we acquired, Software Innovation, some 3 years ago continues to perform fairly well. So software business is adding nicely on the industry-wide differentiation of Tieto versus our very traditional competitors. And absolutely, I believe, will continue to be good and accretive business for the company.A couple of other key indicators of performance. First of all, very positive. And to be fair, as expected on the cash flow, fourth quarter cash flow EUR 82 million adds to the good development of the full cash flow profile for the full year, highest cash flow in several, several years for 2018. Furthermore, we continue to see good development working well for us. The offshoring, very important for our customers, very important for price competitiveness and for getting further skilled colleagues around the world to be faster available for our customers worldwide and especially within and for the Nordics. So overall, indicators of all core performance measures in a good shape as we ended 2018.I'll next comment then, as usual, on the service lines and a bit more, in a brief manner, regarding the industry groups. As we begin with Technology Services and Modernization, a good fourth quarter. 2% growth in local currencies. Profitability continued to improve and be at the healthy level. Primary contributors here being, as you'll recall, this is a combination of our application services and infrastructure services. Our application services business has continued to develop favorably. Good growth. While the decline in traditional infrastructure continued roughly by 3% for the full year, very consistent, to be fair, with our own expectations. And as commented earlier, our cloud business favorably growing up by about 15 -- 15%. So overall, the competitiveness -- if I make a bit of a longer-term consideration of Technology Services and Modernization. First infrastructure, over the last 6-year period, very good turnaround, competitive. And naturally, the market continues to develop pretty fast. I think we're in a good shape of being competitive in infrastructure for the future as well. Application services, very positive turnaround, in our case, in the last 2- to 3-year time frame. Clearly, higher growth than the market on average, and profitability continues to develop favorably and supporting well the overall good trajectory of our total Technology Services and Modernization business. One comment I would like to provide here regarding the first quarter. We expect first quarter to be somewhat below the level of Q1 2018. And to be fair, in early part of the year, as usual, price erosion or price discounts kick in. And especially in this business and specifically the infrastructure side, it is very much normal. The beginning of the year is somewhat slower than the remainder of the year due to the structures of the contracts. And that, we have been able to manage fairly well also in prior years.Regarding Business Consulting and Implementation, fairly good. Not great fourth quarter. Overall growth, good. Organically, 9%, supported on top of that with the acquisition side resulting in 27% growth in local currencies. Overall, profitability at 8% level as expected, as it should have bounced back from the third quarter level. To be fair, not quite at the level we are planning longer term. And main driver, 1 or 2 projects that did last -- or were still burdening us, to some extent, for the fourth quarter. And these projects were ended right at the end of fourth quarter in a satisfactory manner. But I just wanted to reflect that the 8%, while it was a bounce-back from Q3, I do believe firmly better profitability figures will be visible in the future. And with all that in mind, we expect the Q1 adjusted margin to be at or above the level of Q1 2018.Regarding our Industry Solutions. Top line development, organically local currencies, 1%. Overall, you might think that the growth is not that good. Regarding our overall plans for growing the software business, clearly, fourth quarter, not at the level that we planned longer term. While this was very consistent with our own expectations given that we knew we had deliveries to focus on a couple of the software businesses, thus growth potential was not there, while a couple of our businesses started to deliver good growth, specifically as I referred to a bit earlier, on the Payments solutions side, which was not the case half a year ago, and furthermore, on the Hydrocarbon Management side. What is a very important foundation, which I know I commented briefly earlier as well, the profitability bounced back as expected, over 15%, as we have had very favorable development in 2 of the 3 softwares, where architectural renewal has been taking place. So specifically, on the Healthcare side and the Payments side, positive developments, thus supporting -- as management has anticipated, profitability bounced back. And I do firmly believe our software business will continue to be accretive and a very good competitive differentiator for the company. Q1, we expect the margin to be close to Q1 2018 level. That actually also relates to the fact that while most of the software businesses are now out of the previous challenges in the utility sector, we continue to invest a bit more in the early part of the year. And furthermore, we expect the Industry Solutions business overall will then become, kind of, better performing as the year goes on.Furthermore, on the service lines on Product Development Services, again, a really good quarter. And we've seen positive sustainable very solid performance. This time, 10% growth in local currencies, adjusted profit of 10.1%. And my message here is actually the same as it was at the end of Q2 and Q3, performing well on all factors both in the more longer-term customers, as an example in the telecom side; also gaining more foothold with new customers growing, as an example, in the automotive sector and new industry opportunities we do continue to see in the horizon. Worth a comment regarding Q1, as we expect the margin to be a bit below Q1 '18 level, Q1 '18 profitability was extremely strong, driven by, also, a kind of uniqueness of the business mix. We expect Q1 to be good but potentially not as great or super great as first quarter of 2018.Next I would like to offer perspectives on the industry groups. In our Financial Services, actually, negative growth for the fourth quarter, driven by some price erosion on the infrastructure side, some price discounts kicking in, while being then, overall, positive momentum being driven by the software side of Financial Services. Good new agreements signed during the quarter. And overall competitiveness, both in the outsourcing side of the market and the new businesses, I do believe, continue to be attractive.Next, briefly on our Public, Healthcare and Welfare. Again, a very good growth of 9%. Good performance across both markets -- both of our main markets, Sweden and Finland. And overall, this growth, even when we had a bit of a lower revenues on the Lifecare -- the healthcare solutions suite than we tend to have in the fourth quarter, even with that in mind, the industry sector did perform well again in the fourth quarter. Our Industrial and Consumer Services grew by 4% in local currencies; organic growth, minus 1%. The growth overall supported nicely with our Avega acquisition. And software side, Hydrocarbon Management performs well. And the SmartUtilities side naturally impacts this of the industry groups. Throughout the year on Industrial and Consumer Services, good number of customer wins, and also kind of more and more advanced and positive business mix. Overall, new agreements, including SSAB and Volvo Car Dealers achieved and signed during the fourth quarter.So that would conclude the normal summaries of the services -- the service lines and our industry groups. I would like to, as usual, also summarize our performance drivers for 2019. And you will likely see here a great deal of consistency with the industry logic we have had in prior years. We expect that growth will be a good contributor to the overall performance of the company and ambition to grow above the market, which we have been able to demonstrate also in '18. We maintain our offering development cost of around 5% of group sales. We continue that consistently. We have normal efficiency and productivity improvement activities and programs, spanning from automation, optimized subcontracting, offshoring and normal pyramid development in our -- especially the consulting side. Furthermore, given the headcount increase of about 900 people during 2018, salary inflation to be slightly over EUR 30 million. And next, we will be opening up our strategy in full. One of the main dimensions -- one of the main 3 dimensions of the plan is significant simplification of the company. And this simplification enables further efficiency, gross savings of EUR 30 million to EUR 35 million and potential implication of -- to 700 roles in the company. And I'll talk through that logic in more detail in a few minutes after we cover the interim report. And the overall performance drivers are, in a similar way, predictable as we have -- we believe have had in the prior years.And with this in mind, we offer similar guidance as we have in the previous years as well. We expect the full year adjusted operating profit to increase from the previous year's level. Now, of course, in parentheses, in the restated amount of EUR 168 million, and that is now adjusted for the amortization of acquisition-related intangible assets. So that is our -- indeed our guidance. So to summarize our fourth quarter and the year, it was really nice to end a year with good performance, strong growth, strong cash flow. Growth of 7% for the full year, clearly better than the market. And operating profit, healthy fourth quarter, 11%, and reaching our longer-term aim. What was quite a distant aim some years ago, it's good that we reached it. And we now have an opportunity, as we interpret how the market will develop, we are upgrading the view of the future through the strategy and shall be visible also to shareholders, given the dividend proposal and the continued increase of dividend.So thank you, I think, for this opening part. And we'll now turn it to a usual Q&A.
Okay. Thank you. That was a good short mental pause, and now we go to the real exciting part of today. If I -- first of all, so we are communicating today, and I'd like to take now about half an hour to walk through our strategy. This is the third time in the 6-, 7-year period we are redefining the future of the company. And we have a good degree of comfort that we are reading the market signals in a good way and making a set of decisive choices regarding the future.Over the last years, we have been able to systemically prove that we deliver how we -- what we believe is best for our main stakeholders, for our customers, employees and shareholders. I maybe only highlight a couple and not all -- not from an overly long-time horizon perspective. It is not so long ago we started to reorient our company for growth. I mean, that was first even talked about during '14. We started to talk about the start-up, where you're thinking and setting up start-up operations. Around that period, we created any type of M&A capability for the firm and then, furthermore, building more overall skills in certain areas, specifically for Sweden and the Industry Solutions side. And then starting to focus a lot more on how do we help to modernize the capabilities of the company, helping all colleagues on this Learning as a Lifestyle, recognizing the pace of change in the industry becomes faster. And a lot of attention, only 3 years ago, into customer experience, and it has been quite positive progress. I am not saying that the progress couldn't be faster, the sustainable progress in the rapidly changing tech sector. And also in mind, that we were nominated to global technology top 100 just a year ago, and we've had multiyear performance across all main financial measures and, I would say, especially, the customer experience and employee experience side gives a solid foundation for an even greater tomorrow.We believe that we can play and will play an even more significant role in enabling the well-being of the society and helping people to live and businesses to benefit from living in the very data-rich world. And this is an environment we started to step into only 3 years ago, where we started to talk a lot more about how to get -- provide the benefits to individuals and businesses in the world through adoption of the latest and the most relevant technologies, whether it is natural language processing, machine learning, artificial intelligence, applying the benefits of hyperscale, open APIs and the likes. But this enables, actually, the society to reinvent itself and create very competitive societies, very competitive companies all around the world.We believe that in the next stage, our contributions to society will be also on a higher level. And if I give just couple of examples. Privacy and ethics. AI and ethics is becoming a very hot topic. We are already contributing as Tieto on how can we advance the -- how to apply artificial intelligence, combining the way that ethical standards should be formed in the future. We believe that the whole circle and sustainable society, sustainability will become ever more important. And for all these benefits for the society, technology plays a fundamental role. And in the markets where we operate, we will provide even greater value, greater benefits to create this type of a very data-rich and well-functioning sustainable society. So a bigger story than just our numbers, also the benefits for all constituents. And I will naturally talk about the numbers in a little while.Furthermore, as we had a bit opened up on a bit of a higher level in the Capital Markets Day on purpose in the end of November, what market changes are we reading into. The way our customer behavior is changing, I believe it is quite profound. Customers used to build their competitiveness producing their goods and services faster, cheaper, quite in a similar way over multiple decades. Nowadays, any business needs to reinvent its services to its customers through data-rich experiences. And we are already quite well on our way with a number of customers, whether one thinks about servitization in the manufacturing sector, whether one thinks about predictive health care in the health care side, industry clouds, connected vehicles, a lot of innovation is taking place to drive personal experiences, data-driven value, cross-industry ecosystems. And the ways of working become very different than the quite rigid functional ways of working in the past.Furthermore, we are seeing that the number of constituents we talk to in the market within our larger customers, it is proliferating very, very fast. The entry points into driving innovation are broader than ever before. Innovation to drive a data-rich experience can begin from design. It may begin from kind of reinventing e-commerce and personalizing real-time. It can be around data platforms. It can be around cloud-native application development. All these are entry points into reinventing competitiveness of any industry and any company. We, furthermore, add value to our customers by helping to adapt and, as relevant, modernize the enterprise architectures and drive the full modernization of the application landscapes whereby one very important benefit for our customers is the continued improvement in efficiency and lowering of total cost of ownership.So this is the foundation, what we will call like the innovation wheel for the enterprises. These are areas and a system where, Tieto, we can play a much bigger role helping our customers to advance even faster. And we have capabilities already in a number of these domains. And as mentioned, I believe we can play a much bigger role. Now other part that is fair to recognize, that there is a reason why this change is accelerating in the short time frame within the future. Technologies such as artificial intelligence, public cloud, open APIs, natural language processing, many of these technologies are becoming modern to be adopted -- adapted for the companies today. And with this innovation opportunity is also increasing the investment appetite for our customers. And to be fair, any enterprise one talks to, and whether one talks to the CEO, the CFO, CDOs, CIOs, the business leaders, this type of an innovation opportunity is very high and has a priority in the minds of the clientele.With this in mind, we are updating our value proposition to our customers, which is to make our customers more competitive. That's a very firm one, highly focused one. Furthermore, the positioning of Tieto towards all of our stakeholders, we believe we shall be creating great everyday experiences for the benefit of all our stakeholders, as commented, and would include also the societal impact. So the opportunity for us as Tieto to have a greater impact for customer's business and play an active role in enabling the data-rich society, we believe, is very profound, very inspiring for the years to come.Very practically in our strategy work, we are making choices in 3 domains. I'll talk a bit -- naturally, in more depth of each area, the services enabling customers' competitiveness. We'll talk a lot more about context-rich customer engagement, having greater and greater insight in every interaction. And we'll talk a lot about simplifying the ways of operations for our firm through network ways of leadership and -- network ways of working and network ways of leadership.And furthermore, during the strategy period, I believe we will be reaching new highs on the customer experience side, aiming to have the best customer experience in the market, being the most engaging workplace, and we will be upgrading the financial ambition. And naturally, I will talk about each one of these sections in a bit more detail. Regarding the services enabling customer competitiveness, the greatest driver of the digital experience and the digital society will be a business we call Digital Experience, enabling new business models and experience for the customers, taking advantage of the combination of design, data, cloud native kind of world that able to support the customers in reinventing their businesses and their services even faster. And there, we plan to actually significantly uplift our capability, the number of people we have, as an example, on data science, data engineering. So that will be a very important area for the company. Furthermore, it is good to confirm, and I feel like -- feel very good about it, that all our businesses today are competitive. We'll call Hybrid Infrastructure specifically as a business driving the customers' business continuity and aiming to be one of the very best in the infrastructure services in the world. And the third business, our Industry Software, so we will combine all of our software businesses into one unit to be able to run software businesses as a global software company does. And furthermore, our Product Development Services, focusing on the global expansion and very much in accordance to the strategy we have had. So overall business mix, the service capabilities that we have, I believe, are very rich for the market that is being created. I would like to say a couple of furthermores around this Digital Experience and the type of assets and skills we already have, which we have been building over the last 2- to 3-year period. On the right side, around design, business consulting and customer experience, we have over 600 people just in the areas of design and Customer Experience Management. We have started to invest only a few years ago into data science and data platforms, data analytics, and we -- the market demand for this type of skills and capabilities, naturally, continues to increase. Furthermore, based on the history we have of managing and creating high availability, both application and infrastructure architectures, we have a tremendous role in advising on how to adapt the enterprise architectures and combining everything with our application management skills and capabilities. And with this in mind, being able to work with the customer with a much broader agenda than the narrow corners we may have worked in the past years. With that in mind, the addressable market for us, I believe, will clearly expand. So as reflected upon, we have a fairly good foundation to begin. To begin with, we expect to actually recruit and reskill between 2,500 to 3,000 people in the next few years. The market demand, we believe, is that attractive. And we'll have a center of excellence that actually incubates new skills that are in high demand and may be in short supply. And we can also build our own global networks covering our global central -- centers of expertise to provide, as an example, additional capability and capacity around data science, data engineering, data platform. So this will be a change process that will take some time. And we are already engaging and have engaged in the past 1 year time frame in multiple such discussions with our customers, and it becomes a matter of how can we do this multiple times better and bigger than up to now.I will just make very short comments on the existing businesses which are fairly well recognized. So our Hybrid Infrastructure, so we will not run application services and infrastructure together as we have for the last few-year period. Application service has a lot of synergies within the innovation side that I reflected upon in the last few minutes. We clearly aim to be a very much leading company in hybrid infra for enterprises, world-leading technologies, world-leading partnerships with our partner companies, and believe that the service experience in a well-orchestrated manner, doing smart investments on robotics, automation and continuing the fairly good progress we have made on quality and automation, as an example. And the business has been developing favorably over several years. And naturally, this continues to be supercritical for our customers and for the society, that we run continuous services on hybrid infrastructure in a very effective way. And at the bottom of the page, a bit of an inventory of the existing good capabilities we have.Furthermore, the view on industry software is quite similar to the perspective I offered the Capital Markets Day. Now we organize all the software units. We have very good software assets in 3 sectors: Financial Services, the public sector and the industrial sector. We commented those also in the interim report some 20 minutes ago. These are based on very strong industry fit and knowledge base, tend to be very much long term, multiyear, maybe over 10-year experiences with customers. We believe there will be significant synergies driving the best business practices, R&D practices, architectural practices, program management practices within the R&D landscape, and we can strengthen the total performance and the market expansion outlook for our software business. Strategically, the ambition continues to be as high as it has been. And thankfully, we are surpassing some of the operational challenges as we have had on the architectural transformation. And furthermore, our Product Development Services continue to expand their customer base globally, very consistently with the prior messages we have. So regarding Product Development Services, no new strategic perspective and very favorable development. And overall, a strategic opportunity around PDS.Furthermore, I would like to confirm our geographical strategy. It remains very similar as we have had. First and foremost, we believe we need to do, can do, will do better and more in the Nordics. That's our #1 source for market share gains. Second of all, selective expansion of our software businesses once these become operationally mature and ready. And third component, we have an aim longer term, once the first 2 stages go well, to look at a broader Tieto brand expansion on the European landscape. And naturally, that is dependent on the full scale of the firm and the growth -- naturally, the growth ambition is high and the expansion opportunity over time, we believe, is good. And as commented, PD is very much the global expansion path. Very important to our customers is the global network. We have about 50% global deliveries. And the capacity of all deliveries, high-quality, high customer experience, good scale, being able tap on to great colleagues, our campuses in China, in Poland, in Czech, in India form very good international perspective, global perspective, supporting our global customers in a very good way all around the world. And this gives also a foundation for our resource and overall operational scale as well.Next I would like to talk about a bit of a new chapter in how we will be reshaping and developing the customer experience and value to our customers. We'll be talking a lot more about the so-called context-rich customer engagement, where we aim that in every interaction with customers, we add a significant amount of unique expertise in relation to accelerating customers' own business objectives, their strategies. We'll be talking a lot more about the types of client partners, the business partners supported by dynamic experienced teams from different parts of the company, enabling the total innovation for the customer to become faster, more agile and more productive than ever before, supported by our expert teams, our service practices that we have been forming throughout the last few years, as the source of quality, source of capabilities. This is also leading into our agile ways of working inside the company to create these experienced teams interacting directly with customers. Through this context-rich mindset, we will also clearly aim that more and more of our 15,000-colleague population, more and more of us will be directly and more actively engaged directly with customers. I would like to say a couple of words about the network ways of working and leadership. This is, of course, a -- quite a fundamental shift, which will take a bit of time to also mature and materialize. So first, we begin by the top left, which I touched upon briefly, is the customer engagement. That's one essential part that, that becomes experienced team and client partner -- business partner-led a lot. We will also simplify our business structures, very clear accountability of the 4 businesses, I will summarize in a minute. Full accountability, simplify decision-making. We'll be looking at the management system that we call it fit for purpose. We'll simplify measures. We will eliminate any internal hurdles for collaboration, again, for the teams to be more agile, more nimble and faster. And then also leadership side, much more through informal networks, a lot less from very traditional, rigid, slow, functional ways of leading the different businesses and parts of the company. So this becomes a system that will become much more agile, faster and will enable a great deal of simplification for the firm as well. The agile teams for the customer teams and customer needs will become visible, as commented, through the partner-led experience teams. All of our businesses interacting directly with the experienced teams whom are then in connection with a -- in a very context-rich manner. And we will have the global delivery centers and centers expertise in support of this type of an agility, agile model, making these resources, capabilities available even faster. And from a strategic standpoint, you probably feel with me that changing the ways of working and leadership of a firm begins a bit with philosophy, the structures will follow. And we will of course reflect in the quarters to come what is the speed at which and the benefits we are gaining from this.Very specifically then, the go-to-market structure. As we are simplifying the operations, we begin by focusing the go-to-market on maximizing our market share in our main markets. We will have what we call a country management network for the main markets. And we have our 4 main businesses fully accountable for their performance: we have a Digital Experience side, a great deal of acceleration expected as we have shared here; our Hybrid Infrastructure business; our Industry Software Business; and our Product Development Services. The country management network will be led by a country managing partner who shall be -- who shall have 2 main objectives: maximizing Tieto market share and personally leading the acceleration of our Digital Experience business in the country in question. And that's where the orchestration at the country level happens, that we optimize the resource availability and collaboration, the networks of all of our distinct businesses. And the everything is supported by the center of excellence and global delivery centers, again, providing better scale, faster access to resources. So I think we will see, not just in the way we summarize and report the company towards our analyst community, but this will actually simplify -- it may be a bit difficult to feel from an external standpoint, but the magnitude of simplification will be very tangible internally. And with this in mind, we are introducing the Tieto leadership network, where we naturally have customers at the very top. We'll have our client and business partners and our experience teams, so really the people engaging with the customers. And the core of our leadership network, kind of the leadership team for the company, has our what we call the performance roles. That's where the cash flow -- the cash generation happens: the Managing Partner, Finland; Managing Partner, Sweden; Managing Partner, Norway; Head of Hybrid Infrastructure; Head of Industry Software; and Head of Product Development Services. And then we have our capability and experience roles: the Chief of Talent and Culture, Chief of Technology and Quality; our Chief of Experience and Head of customer experience centers; and then more the group strategy and group performance, CFO, our Head of Strategy; and myself.Here we also have our new appointments. Managing Partner for Finland, Satu Kiiskinen. Managing Partner for Sweden, Håkan Dahlström. We are in the search of a new Managing Partner for Norway. Head of Hybird Infra, Petteri Uljas, a new member for the management team. And head of infrastructure -- Head of Industry Software, Christian Segersven. And Tom Leskinen continues in -- as Head of the Product Development Services. Katariina Kravi continues as Chief of Talent and Culture. Markus Suomi as the CTO and Head of Quality. Julius Manni, as communicated some while ago, joining us as Chief of Experience. And Ari Järvelä, Head of Centers of Excellence. And Tomi Hyryläinen begins as the CFO tomorrow, and Janne Salminen continues until that point in time. And Janne has done a great job as the interim CFO. And Kishore Ghadiyaram joins the Group Strategy. He has been in that role for a few years already. So this just confirms also, and hope that adds to the clarity.Next I'd like to go into kind of -- so what does this all deliver? So that's a bit of a -- the logical strategy, strategic choices that will become naturally visible over the period. And everything doesn't happen, so to say, overnight.So this type of an operational simplification that we are aiming at, we believe this will benefit us from an increased activity standpoint, more time with customers. We will have people spending less time and we'll have less people spending time in coordination and administrative roles as we are eliminating our matrix. We believe we can extend the market share and the addressable market scope with our customers. We'll be adding to the contextual richness expertise for the domains that are -- that's most important for the customers' businesses. And we have the simplified management system and measures. So impacting our opportunities for growth, overall, into customer experience, and very specifically, on the efficiency side.With this in mind, of the whole operational and structural simplification, we are currently estimating for potential reduction of 700 roles globally, and resulting in annual savings between EUR 30 million and EUR 35 million. And the design work itself will now accelerate with the distinct teams in the company. And once the design is complete, we will then be communicating. And as you may have read from the stock exchange release, the whole new setup and the structure will begin -- will become gradually effective during the second quarter of this year. So interesting steps will be taken.Furthermore, in the financials. As always, when companies reshape their views of the future, make the choices, believe in adding competitiveness, essential and very important part is to confirm that the attractiveness to the shareholders will become even better. And the items in our financial ambition remain similar. We're upgrading the view on growth to over 5%. And maybe just a reflection here, similar consideration on M&A. So we are not transforming in any dramatic way on how we think of M&A there. It's very important, as you have noted, the companies we may have acquired, we believe they would be accelerating the agenda we are already executing. That has been a big driver for us. And we are upgrading the expectation on adjusted operating margin to 13%. Drivers naturally being the combination of growth, simplified operations, automation and continuous focus on the total delivery capacity capability worldwide.And we, I would say, maintain the net debt of EBITDA below 2%. And now this is an update after the, kind of, the IFRS 16 taking into effect. And very similar overall balance sheet structure. And also want to confirm that the CapEx is expected to remain 4% of sales. And we maintain our dividend philosophy. We aim to increase base dividend annually in absolute terms. So I am very hopeful and I believe that the shareholders, investors will see the investment profile in the future of becoming a combination of growth orientation we have been able to demonstrate that, maintaining our eye on the ball for sustainable improvement in profitability and the dividend attractiveness.I would like to also give a perspective a bit on what type of contribution from the respective businesses we anticipate for the years to come. And this is now reported through a bit of this, kind of, a dot structure. The more the dots, the higher the contribution and higher relative the, kind of, average expectation we have. Digital Experience. Naturally, we expect this to be a really good growth driver. We are expecting to be recruiting between 2,500 to 3,000 people on driving this market opportunity. And this type of activation I fully expect that we will get on this bandwagon already this year, to be activating this way of uplifting our capabilities. And our profitability contribution in a consulting-led, data-led market, we believe, is indeed attractive for us. Hybrid Infrastructure is a domain where we have done good progress overall in the industry worldwide. The Hybrid Infra margins tend to be a bit lower. The growth expectations on Hybrid Infra overall is lower, and that is the case also in our mind. Industry Software should be a good contributor to growth. I think time will tell how far could we take it. I think, currently, we are looking at this in a quite realistic way. The more we could be driving international expansion and M&A, which we don't yet necessarily see all of that today, we could have further potential. And clearly, software businesses, that will be accretive and contributing to our profit ambition. I would see there much more, in relation to how we -- the performance we have had on software, let's say, a bit -- 1 to 3 years back, '18 has been an investment year and we start to deliver better on Industry Software. And Product Development Services being at least as a good growth and profit contributor, let us see what else we could invent given the positive dynamics of the Product Development Services market as a whole.So these become the so-called reportable segments and we'll update the segment reporting during the second quarter of this year. So everything starts to become effective, as I have mentioned, during Q2. And the opportunities, I would be hopeful that for all of you on the line, the Hybrid Infra is an area we know well. We have good history there. Industry Software, we talked a lot about that side, the market opportunity clearly higher than we have so far performed. Product Development Services has been a very positive turnaround. The market has even become more attractive. And we will be stepping into the Digital Experience bandwagon to really drive the data-rich world of the Nordics. Demand is good. We have a good foundation, and it should become nicely accretive in relation to every ambition that we have. Furthermore, I would just like to confirm our logic on investments without any sort of a huge deep dive. Maybe most important that we maintain our perspective of keeping investments around 5% of our revenues. We believe, as we elevated the investment level 3, 4 years ago, we will stick with that. We are not increasing 70% to 80% of the investments to go into Digital Experience and Industry Software. These are domains we know, we have programs underway. There the only question, how do we accelerate in the smartest possible way with the fastest possible incremental returns to the company. And naturally, we are mindful that investments, to a degree, are required in every business. And one specifically I would like to highlight is the Learning as a Lifestyle program that was launched less than 2 years ago. We have over 12,000 of our 15,000 colleagues, in a self-driven manner, wanting to learn new skills and capabilities in the domains we a lot start to talk about more and more. So overall investment agenda, good. And we believe it is also at the level that the company will continue to become more and more competitive.Couple of words, as always, on strategy and what type of implementation. First of all, we have a good starting point and our appetite is to accelerate in the smartest possible way. This year, we'll be -- first of all, we'll complete the design. We'll begin the transition to the new structure. We'll be driving the efficiency improvement. We'll look at uplifting and upgrading the customer engagement into even more context-rich capabilities. We'll begin the investment into Digital Experience and its acceleration. And very basic operational attention will continue; very high activity level in the market, which we have demonstrated; continuous improvements in quality and the type of expansion opportunities our businesses have already identified.And for the strategy period, I think it will be super exciting. Very likely, the most exciting strategy chapter we have seen in a long time. The world around is changing. I'm so happy that we are placing our bets, and very positive feedback from the customer testing we have also done in relation to the new strategy. We really aim at the leading customer experience in the markets we operate in, most engaging workplace and a very solid continued progress as far as all shareholder interests are concerned and shareholder returns. As a summary for the whole strategy, we aim at making our customers more competitive by focusing on digital experience, renewed customer engagement. We simplify operations, meaning we are able to give even higher level of service. Digital Experience as a spearhead from a growth driver standpoint. All businesses solid, important role in our portfolio. And investments -- and investment prioritization has already started. Over time, we expect to add very important capability and capacity. The operational simplification, potentially impacting around 700 roles globally, driving annualized savings of EUR 30 million to EUR 35 million. And we have upgraded the financial ambition, as we have discussed. And we will make the gradual transition to the new structure and reporting during Q2. As a summary, I would also like to reflect that the opportunity we have for creating fantastic everyday experience is for all constituents, for our customers, for employees. It is tremendous in this data-rich world. Looking at the areas, such as how do we contribute to advancing the Nordic well-being and the sustainable societies, none of this will happen without advanced use of data. Highly advanced technology and business partners. Enabling digital democracy with smart use of technology. We are one of the more advanced in the world from a, kind of, driving democratic society. We could be extremely advanced on driving digital democracy as a role model in the world and see that as being expanded throughout the society. And very important contribution to ethics, as an example. And we believe we'll be continuing to firmly build on the very unhierarchical Open Source Culture, where everything begins with the utmost respect for every individual, which should also be a driver for the society as a whole. So a really exciting chapter we are embarking on. Hopefully, you see a very clear set of choices, a very deterministic mindset that we will continue to build a very positive future, and clearly, more competitive Tieto for the years to come.Thank you. So this would be a great time for the next round of Q&A.
Thank you, Kimmo. Now before we go to the strategy and long-term financial objectives, we take your questions on the results. And Janne Salminen, our acting CFO, will join us. So we are ready to take questions from the conference call. Moderator, please go ahead.
[Operator Instructions] We will take our first question from Daniel Djurberg from Handelsbank.
My first question would be about the book-to-bill, if could you possibly quantify. So it was positive in -- or a positive end one, I guess, in Q4. And also, how much on the decline you have in the order backlog that was coming from currencies and how much was about the underlying changes in the order structure. That was my first question.
Okay. So if I first comment, I think, overall, so we had actually -- across our businesses, we just had a very strong order intake for the fourth quarter. And we saw specifically some, I think, very positive movements in a couple of the industries and also with some of our Industry Solutions software products. So if I may, nothing unusual. Periodically, it happens in our company, as in the industry, that you get a bit of skew when contracts are closed. So normal momentum, and it was just kind of a peak. But if I as commented, nothing unusual. Good success in closing and good win rates and very much at the levels that we had also, if I may, expected. Janne, maybe on the currency.
The currency impact was roughly EUR 25 million in the order backlog.
Perfect. Another question, if I may. I might have missed this. But do you expect any nonrecurring item or restructuring charges for 2019 to meet the annualized gross savings that you highlight in your closing remarks?
If I may, I propose that we, kind of, cover that also as part of the strategy. So based on the -- but of course, I shall address it here a bit as well if you wish to. So as commented on the performance drivers, so when we are seeking to -- as we aim to and we'll simplify the firm, we have clear productivity gains as we eliminate the matrix, you'll see in the next session. So with that in mind, we can improve our scale and competitiveness through the savings program or productivity program. So naturally, as an outcome, it shall contribute to the overall performance for 2019, more towards the year-end. And it will also, as a consequence, have very likely a degree of restructuring charges.
Perfect. And then my last question, if I may, would be on the Financial Services. It was a little bit tough that quarter due to delays from pricing erosion and so on. Can you comment on the pricing erosion part, if it's -- kind of stems from the long-term deals that you need to lower the prices every year? Or the positive in this good market, it should be possible to mitigate by perhaps raising prices in certain areas, for at least time and material?
Yes. So these relate to only a very few -- a couple of contracts. And these were clearly longer term and well predictable. So that is, I think, first part of your good point. And the second part that in our industry, I think when there's a bit of a shortage of talent, our industry as a whole have -- we have not been able to really drive price increases. The level of competition, it is very, very active. Nothing unusual end of year, but as we've said for a few years, there are bids where you have 18 companies participating. So it is always, always tough. And with that in mind, again, it's just good that we also demonstrate -- as an example by the way, Financial Services, where growth not at the level we longer term clearly aim, the growth in the fourth quarter. On the other hand, actually, new contracts signed in that sector happened to be really strong in the fourth quarter.
[Operator Instructions] We will now take our next question from Michael Briest from UBS.
A couple from me. Can you talk a bit about the market environment or give some more color? You were talking about the Nordic market growing 2%, 3% this year. I think last year the expectation was 2%. Where are you seeing the outperformance by industry or country? And then in terms of the salary pressure, it still seems to be set around 4%, so no real increase. Do you think that's sustainable in a better market environment that we have today?
Yes. Yes, thanks, Michael. So overall, the market, there have really not, in my view, in any kind of -- not a fundamental change. Now as I briefly commented, the magnitude of the investment agenda from the customer side for, I would call it, the nontraditional side, which we'll talk a lot more in the strategy, that appetite is higher. I think that will fuel the market growth. Now of course, the other side, which is kind of a bit difficult to predict with extreme precision, is that what is the magnitude of price erosion, as an example, on the infrastructure side. So with that in mind, I would call it that it's similar 2% to 3% and the skew will be more. And we see as an opportunity to be, within the new domains, much more active. And in the Nordics, overall, I think we see similar, kind of, a market appetite level between Sweden and Finland. And naturally, we, as Tieto, have a lot more to gain and a lot more to do in Norway. So to be fair, we see this type of a good market dynamic and -- market dynamics, an opportunity in all of the, what we call, our core Nordic markets. Furthermore, if I can just conclude my thought on this one. Then naturally, the Product Development Services market over the last, let's say, 1- to 2-year period, as an industry has changed, the demand for extremely advanced software engineering. And in our case, being one of the very best in the world in the combination of advanced software engineering and connectivity. So that type of a market domain, as a whole, is quite different than, as an example, 2 years ago.
Okay. And on salaries?
Yes, sorry. Yes, so on the salary side, so we believe that this is something that we continue to be, of course, managing this very actively. We think these are the levels we will continue to be -- to sustain. And to be fair, we are also becoming more and more advanced in predicting and managing the pyramid structure overall, which is indeed a necessity. Naturally, over time, we will also need to be looking into that, what would be the mechanisms of driving more advantageous pricing mechanisms. So as a kind of an end result, it's a combination of many of these activities. But we think we can manage it, as you had fairly commented.
Okay. And then just finally, you called out the growth in selected growth services -- so that's data-driven, cloud services, Customer Experience Management, Security, as 17% and you've got EUR 200 million in sales. But if I look at last year's sort of disclosure, it was EUR 190 million in 2017. So I'm just wondering, is there some massive currency effect in there or disposals or something, which mean the growth is as strong at 17%?
Sure. I think we need to probably maybe look at that. We could probably even take a look at it a bit offline. Now to do a real-time analysis of the figures, Janne, do you have any...
Okay. Fine.
So when we look at the 17% growth, that is in local currencies. But when you look at euros in the report, they are as reported, so translated into euros. So currencies do affect there.
But if I just comment, Michael, briefly like the overall, on the same side, the 16%. So many of you have followed us closely, so we believe that can grow over 20% and the like. So in that sense, we think that the market is -- we've done actually good to build our Customer Experience Management capabilities up to about 600 people and fairly good growth. It can be higher. Infra cloud, 15%, relative as we -- our part of that is more primarily -- is on the private cloud side, so that's actually fairly good. Security, good, and should be higher than 15%. And overall, the investments into the data-centric businesses, building capabilities for data science and kind of initial investments and capability building and data platforms, is actually delivering already benefits, I would say, also outside of that core investment based on the type of data platforms and analytics projects we are starting, as an example in the manufacturing sector. So it's a fairly good agenda. Can be better, I do agree.
We will now take our next question from Sami Sarkamies, Nordea Markets.
I will start on data solutions. You did make the point that you are starting the year on a stronger foot and that the year will be back-loaded. What level of growth should we -- should be attainable this year? And what kind of margin rebound should we assume as you will start benefiting from the work done in the previous years?
Thank you, Sami, for the question. We try not to give annual guidance for the specific service lines. But I'll, of course, give some reflection. So overall, given that the majority of the platform upgrades or the architectural upgrades are well advanced and/or complete, so naturally, we expect the growth projection to be better for the full year. And that -- with the developments in mind, that's impacted Q2 and Q3 especially. So with that in mind, the total growth level for '18, I -- and actually, that's not up to our own longer-term expectations. So we will improve on that side. And there, I do believe there will be somewhat improvement in the profitability. I think we need to come back on that after we report each quarter. And to be fair, as I commented, the uncertainty now resides only with one solution suite when the case was with 3, 6 months ago. So the potential to continue to elevate performance is a lot better. But I think we need to come back and report that we see the tangible proof that -- how everything moves. And with that in mind, I'd just summarize that this one specific solution area on the utility sector is the only one that we see currently requiring additional investments compared to what our longer-term plans are.
Okay. And then I would have 2 questions regarding the revised targets. If we adjust the new 13% margin target for IFRS 16 and PPAs, it represents a step-up from current level. What gives you the confidence to upgrade this target as you have not been able to make much progress on the margin front in recent years, with flat margins for the past 4 years?
Sure. So overall, so I would like to address that as part of the strategy. But it has a lot to do with which businesses we're -- we see more potential on. The business mix has an implication. And the belief that our businesses are actually all healthy and we have also a good view what are the areas where we have clear upside on. And of course, as you know this well, we have also been investing for growth. And that also has become visible, as an example, in year 2018. But I think, overall, we have seen and demonstrated that longer-term profitability development is fully doable. And yes, our ambition is absolutely to take bigger steps than so far, and that's why we have the grounds to upgrade.
Okay. And then finally on the growth targets that you're now defining at above 5% from previously above-market growth, which is about 2%, 3%. Do you feel you can grow organically faster than the market? Or is the delta coming from acquisitions?
So we believe and we continue to believe, like we said a year ago, that we aim to grow organically. And then we have support by M&A. And as we have demonstrated, it's more of the bolt-on time -- type that we have been able to well integrate. So a combination of organic and then supported by the types of M&A that we have been able to also accomplish in the past. So that combination.
There are no further questions at this time.
Thank you. Do we have any questions on the floor? If not, I think we leave 2018, bye-bye, and look into the coming years and the strategy. Kimmo, please.
Thank you, Kimmo, very interesting. So we are ready to take questions from the conference call. Moderator, please go ahead.
[Operator Instructions] We will take our first question from Hannes Leitner from UBS.
Can you talk a little bit about the margin progression? Do you see that going linear over this period, the improvement? And in terms of restructuring, I mean, maybe I missed it in the beginning, but could you give what will be the kind of cash impact and restructuring charges for '19 and potentially '20?
So if I take, first, on the margin side. So as a strategy, so multiyear, it's a bit difficult to give very specific kind of a view on the -- on how fast the margin development will happen. Naturally, we have our own, clear plans on how to do that. Maybe the best commentary here is actually to look into how -- what type of trajectory we have actually had. So the consistent improvement in profit has been something we have been, so far, able to deliver. So it's very difficult for me to give you a statement, is it in the early, mid or latter part, that -- the profit improvement. We will naturally provide the normal guidance on an annual basis. But if I try to reflect a bit first. So naturally, very likely, the greater improvement in profit will happen when we are -- first of all, we need to drive the simplification. We have great opportunity to drive a more effective firm through that. And once we, in certain businesses, deliver a -- the higher -- well, once we start to deliver even a better view on the growth profile, naturally then. So with that in mind, it'll likely take a bit of time. But we are very firm on aiming to increase, in a smart way, the profit level each year.
And when it comes to these restructuring costs, we have had this guidance of 1% to 2% for a number of years, so it's kind of longer-term level. Of course, as we saw during last year, there are fluctuations.
So just to confirm, we maintain that view. And as Janne said, indeed, that year in, year out, there can be some fluctuation.
Do you think you might...
Okay. So there's basically no material changes to it.
Not to the perspective on what type of restructuring spread we tend to see. So that view, we maintain.
Okay. And just a quick follow-up regarding the Nordics market. Can you talk a little bit about the dynamic -- competitive dynamics where just recently was announced that Samlink is acquired by Cognizant. And how do you see the competitive environment regarding every, for example?
So overall, the competitive environment as we -- to be fair, as we have commented also earlier, it's very dynamic, very competitive. There is no significant, I would say, in any way, change in the last, let's say, 3, 6 or even 12-month time frame. It's very competitive. So certain competitors make sprints every now and then, and so that's normal. So -- and we believe that the steps we've taken, we have become more competitive, to be fair, in each market we operate. Maybe the greatest opportunity we have is naturally Norway as we have not been that successful yet in the Norwegian market.
[Operator Instructions] It appears there are no further questions at this time.
Okay. It may take some time to digest, and you may want to come back with additional questions also later. But I have -- one of the questions I got this morning was related to the planned recruitments of close to 3,000 people. And now that the market is very tough, recruitment market is very tough, how do we plan to succeed in those recruitments? How would you, Kimmo, reflect upon that?
So naturally, we have a pretty good history already for driving these new areas. And we have to extend our own networks, not just here in the Nordics, but also in the global centers of expertise we have. So it's very important we tap to the global capabilities, especially in these new domains. And then we are also seeing that our customers value it a lot that we can combine the local and the global knowledge and resourcing. It adds a lot. To be fair, we need to very likely be working even more active a little bit the universities and build this type of curriculums. So a lot is to be, kind of, also invented further. And I don't think there will be a heavy spree, all of a sudden, that we get the huge chunk, it has to be built over time. And to be fair, we have been able to, in the last 3-, 4-year time frame, as an example, we've gone from about 100 to 600 around the area of design and Customer Experience Management, and that would deserve both organic and inorganic activities.
And also, the corporate culture, of course, is very attractive for anyone who considers joining Tieto.If there are no further questions, I think we end for today. And if there are any further questions you may have, we are available for you. I thank on my behalf, and talk to you again soon.
Thank you so much. And hopefully, this was a good combination of good end for 2018 and even more exciting times to come. Thank you so much.